Anyone else have these issues?

Question

I have been at this for about six months now, and I know I have made numerous mistakes, I market to sellers, I put the house under contract, I put the house out to my buyers and if they don't want it then it goes out to various places for sale. One thing that has been consistent every deal I think has been the fact that my sellers who I have been up front and honest with go behind my back, and or I have other buyers that have no integrity, go behind my back. Now I understand that wholesaling is not for the faint of heart nor is it for the soft skinned, and I am by no means one who gives up easily. For example this last deal I had on the table, I put under contract and the place was a mess, fleas, roaches the works, I worked my butt off for the last 30 days to get this sold, my seller to tell me it was "ok because they thought they had it sold?" Now mind you my time on contract was up, but WT...you know what.... I have had two out of state deals both of which I had no control of really and the only reason I made money on one was because my partner there put the fear into them, after finding out that one of the buyer went through and made an offer and had him sign a contract. Is it all just bad luck or am I doing something wrong?

Forgive me if I sound like I am complaining, it is truly not my intention, I guess getting to the point would be has anyone else run into these problems? What steps did you take to fix it or am I just in the wrong real estate niche?

Forgive me if I sound like I am complaining, it is truly not my intention, I guess getting to the point would be has anyone else run into these problems? What steps did you take to fix it or am I just in the wrong real estate niche?

Joe Villeneuve · Answer

First, one of the biggest misconceptions about wholesaling is that it is easier somehow than taking the deal all the way through and buying the property.  It isn't.  A wholesaler must do everything a buyer must do, except close.  In fact, a wholesaler IS the buyer...that passes their deal onto someone else to close on.

Not sure I completely follow your process, and I'm sure you have left out some key items that would "connect the dots"...not intentionally, just due to lack of recognition of the impact of those items on your story.

One key point you did raise was your contract running out and the seller "going around you" to sell to someone else.  You can look at that as a problem, and maybe the seller being unethical, but it isn't...either.  Your contract only controls the property for the period of that contract.  That's it.  Put yourself in your sellers shoes.  They are entrusting you to sell their property for them over an agreed period of time, and are giving you "special consideration" during that time.  When/if you don't sell, you can't expect the seller to wait on you to deliver.  What if you never do?

Remember, a wholesaler is a buyer, and just like any other buyer, when the contract to buy (days to close) is past...so does the agreement.

Your simple solution is to find your buyers first, then find the properties they want based on the the criteria for buying they give you.

James Austin · Answer

Thank you all for your informative replies, it is much appreciated!

Account Closed- your point is very clear and I thank you very much, and will head your advice.

Account Closed · Answer

If you have an air tight contract with the seller then you can easily keep anybody from going around you by recording a Memorandum of Contract with the county recorder's office (not the contract). This clouds the title and the seller or buyer that went around you CANNOT close the deal until they deal with you.

Joe Villeneuve · Answer

Finding your buyers first is always better @James Austin.  You can't go wrong. You're not taking money from them, you are simply finding out what they are looking for BEFORE you go looking for deals.

Look at it this way, you have a choice of either:

A - Finding what you you think is a great deal, and can't find a buyer for it, or...

B - Finding a buyer with an order, and looking for deals that match.

"B" is by far more effective use of your time...you know, the one thing that you can't make more of.  You can always get your money back, but you can never get your time back...so don't waste it by chasing properties with a very low probability of executing an exit strategy.

Reverse engineering is the best way to solve a problem...and buying/selling Real Estate is just another problem to be solved.

James Austin · Answer

@Joe Villeneuve You are absolutely right with every point you made. I think my process has been quite random, I have been marketing out to sellers, I have a small buyers list so for the ones here in Michigan I will give my buyers first dibs, if they don't accept it, then I still have the obligation to find some one who will, so i use craigslist and so on to get the word out and then show the property, the ones out of state I work with a partner on to help sell them. To be quite honest I still had a short amount of time left on contract, but I didn't have any viable offers. I ensure my seller knows that I am not purchasing their property first hand, and it states in my contract that I will assign it, and if I don't get it sold in the time given they have a choice to move on or we can re-negotiate. So far they have moved on beforehand, most are out of state and I do not have the resources to fight those battles. The points you make have brought me back to what I think I have forgotten about. You know the buyers before sellers is a mixed bag, and don't get me wrong I do think its better to have buyers to sell to first, but with different people you have different opinions, which comes first the chicken or the egg?  Thank you very much for your reply Joe.

Anyone else have these issues?

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